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Oil prices lower in Asian trade

business Updated: Apr 03, 2008 19:25 IST

World oil prices eased in Asian trade on Thursday after they rocketed higher following a US report showing a much larger than expected drawdown in gasoline stocks, dealers said.

They said the market appeared to play down a surge in crude oil reserves.

In morning trade, New York's main oil futures contract, light sweet crude for delivery in May, dropped 22 cents to $ 104.61 per barrel.

The contract closed up a sharp $ 3.85 at $ 104.83 a barrel during floor trading yesterday at the New York Mercantile Exchange.

Brent North Sea crude for May delivery fell 16 cents to $ 103.59 a barrel after settling at $ 103.75 on Wednesday in London. The contract had surged 3.58 dollars at the close.

"Prices are trading at quite a narrow range, fairly steady at around $ 105, in response to the US inventories report," said Victor Shum, senior principal at Purvin and Gertz energy consultancy in Singapore.

The dramatic increase in prices yesterday was "a major over-reaction by the market", said Shum.

The US government's Energy Information Administration (EIA) said in its weekly report on Wednesday that United States crude reserves surged by 7.4 million barrels to 319.2 million barrels in the week ending March 28.

The gain smashed analysts' consensus forecast for a gain of 2.25 million barrels.

Traders appeared to set aside a warning from US Federal Reserve chairman Ben Bernanke that the US economy could slide into a possible recession during the first half of 2008.